Behavioral Heavyweights

Nine out of 10 online ad industry insiders agree: Tacoda Systems and Revenue Science are the top names in behavioral targeting. Some chalk up the companies' current dominance to their publisher-side business models. Others believe the two have helped promote behavioral targeting in general, and along with it, their own brands. Still, others say the current status of the two heavyweights is simply a matter of good timing.

"Tacoda and Revenue Science have done a good job of creating demand from advertisers through publishers," observes Denise Garcia, research director and principal analyst at GartnerG2. Jim Spanfeller, president and CEO of Forbes.com, agrees. "One of the reasons we did a deal with Tacoda was because advertisers were pushing for it," he says.

"Markets tend to be led by sellers," says Tacoda CEO Dave Morgan.

Both providers' technologies work in a similar manner; each system is connected to publisher sites, typically on an individual site basis and sometimes on a site network-wide basis. Until Tacoda's recent decision to sell ad network inventory directly to advertisers and agencies, publisher clients of Tacoda and Revenue Science were selling the behavioral-targeted ads, not the two providers. Because Tacoda and Revenue Science have been working directly with these market-driving sellers, they're leading the behavioral targeting industry, or so the theory goes.

Many ad-serving and optimization technology companies that work directly with advertisers have shifted their positioning to ride the behavioral wave. "Behavioral targeting has been going on from the advertiser side for a while," explains GartnerG2's Garcia. She believes ad-side technologies have not made headlines like their publisher-side counterparts because "advertisers are not very vocal about their advertising strategies." A host of companies that fall under the behavioral targeting umbrella, including 24/7RealMedia, Advertising.com, AlmondNet, aQuantive's DRIVEpm, Poindexter Systems, and others, offer ad network-style technologies that serve behaviorally-targeted ads across a network of Web sites.

Same Difference? Both Tacoda and Revenue Science do essentially the same thing, but take slightly different approaches. Each works directly with an array of Web publishers, allowing them to create audience segments based on sets of criteria or by matching keywords to content viewed by site visitors.

According to Tacoda's Morgan, more than 2,700 Web sites are enabled by the company's technology, including The Weather Channel, About, and several regional newspaper sites that are divisions of clients like Advance Internet and Tribune Interactive. A recent deal with Burst! Media to enable behavioral targeting across its network of over 1,800 affinity sites gave that number a jolt.

Many of the publishers using Revenue Science's technology fall within the financial and auto categories, and serve a national audience. They include The Wall Street Journal Online (WSJ.com), The Financial Times, Morningstar, TheStreet.com, Edmunds.com, Kelley Blue Book, ESPN.com, Washingtonpost.Newsweek Interactive, and Bolt. Revenue Science works with 42 publisher sites, according to Nick Johnson, senior vice president of business development and general manager of account strategy at Revenue Science.

Sometimes in order to preserve their branded audience offerings, publishers create unique names and apply specialized criteria to create audience segments. Advertisers claim that lack of segment standards make the site-by-site ad purchasing process tedious and difficult to manage across media plans. Tacoda and Revenue Science have both made efforts to alleviate segment incompatibility. In the hopes of streamlining the buying process, Revenue Science teamed up with Nielsen//NetRatings to score audience segments within, and across campaigns by comparing site segments with Nielsen//NetRatings audience composition metrics.

"The Revenue Science management team helps facilitate campaigns across a multiple publisher level," stresses Revenue Science's Johnson. "Say we get an RFP [request for proposal] from an auto insurance advertiser. We look at our publishers and create segments at the publisher level... so segments within each publisher are the same throughout the campaign," he explains. Although Revenue Science doesn't transact directly with advertisers or agencies, the firm does assist in responding to RFPs and strategy briefs.

Morgan is skeptical of Nielsen's audience segments and stresses the need to adjust segments based on advertiser objectives. To help advertisers track and measure campaigns across sites, last year Tacoda released a set of guidelines for 22 standardized behavioral audience segments such as Home Buyers, Nightlifers, and Newshounds. Morgan says most sites using Tacoda adhere to the guidelines.

The Behavioral Challenge iVillage chose Tacoda before Revenue Science was available, explains iVillage's senior vice president of sales, Peter Naylor. "It's like the cola wars right now between Revenue Science and Tacoda," he quips. There's a good chance that if the two were cola contenders, few would be able to tell the difference in a blind taste test.

"To be perfectly honest, I think [Tacoda and Revenue Science] have basically the same offerings; however, they come about their offerings a bit differently," points out Jason Krebs, vice president of sales and marketing at New York Times on the Web. He adds, "The differences are not material enough for advertisers to care." As far as Andy Chen, online media strategist at interactive agency Freestyle Interactive, is concerned, choosing the best technology depends on an advertiser's campaign objectives. "There's not one that's better than the other... just because one campaign works on Revenue Science doesn't mean it works on 24/7."

"Both [Revenue Science and Tacoda] are strong innovators and both have great technologies," says Mike Henry, vice president of sales and marketing at Dow Jones Online, a Revenue Science client. "Revenue Science has always been very interested in our business and coming up with solutions on a variety of fronts," he continues, noting that the company originally provided data mining technology to Dow Jones Online.

Throwing Down the Network Gauntlet In March, when Tacoda unveiled Audience Networks, a network offering that focuses on brand advertising, a breach between the firms' business models emerged. Clearly aimed at creating broader reach for advertisers, the service will run ads across a network of several sites. Tacoda and partners will sell the ads.

"I don't see [Dow Jones Online] working as part of a network," comments Randy Kilgore, senior vice president of advertising for the publisher of WSJ.com and MarketWatch, both Revenue Science clients. Though he foresees Dow Jones sites partnering one-to-one with other Revenue Science sites such as Kelly Blue Book, for example, "It's theoretical right now," he adds.

GartnerG2's Garcia predicts, "I see both [Tacoda and Revenue Science] moving into a network business model." Revenue Science isn't willing to divulge plans, but Revenue Science's Johnson does imply the possibility of a network-type offering. "The real issue here is the ability to aggregate targeted reach across the Web so audiences can be bought and sold effectively," he notes, adding, "We'll announce our strategy when the time is right and with publishers and advertisers who are participating."

Some, including Tacoda's Morgan, consider most ad networks mere brokers, doing little to uphold the value of publisher content, or audiences. Network models involving both buying and selling of inventory can also create a conflict-of-interest with publishers. Morgan stresses that Audience Networks will be different because Tacoda won't be buying ads from publishers and reselling them to advertisers. Instead, the company will maintain its seller side-only model.

Morgan claims that Tacoda will differentiate its network product by "being in the high end of the market" and maintaining transparency by making public all publishers in the network, unlike other networks that typically don't reveal their entire publisher list. "One of my jobs is to makes sure the low CPM inventory goes away, so that publishers no longer have to take money from brokers," he insists.

Despite Tacoda's dedication to staying seller-centric, getting advertisers and publishers to buy into the network notion may take some prodding. Brand advertisers are often hesitant to buy network ads because they rarely know where their ads will show up. Advertisers buying into Tacoda's network will not know exactly which sites their ads will be on. One publisher sales representative who requested anonymity asserts, "We don't like other people selling our brand." The source suggested that by joining a network, publishers are bound to give up some autonomy and value, and added, "The stronger brands get the short end of the stick."